References

Forms

Home Office Deduction

As a self employed webmaster or freelancer, one deduction available to you is the home office deduction – provided your home is your principal place of business. As a webmaster, I have a small office in my house which I use exclusively for business purposes and when I’m in that room I’m working on my online business. Because I use that room exclusively for business purposes, I can deduct a portion of my home’s electric bill, insurance expenses, and maintenance from my taxes. You cannot deduct the entire amount of these expenses, but rather a proportional amount equal to the size of your home office in relation the size of your house. If your office is 500 sq ft and your home is 2500 sq ft, 20% of your home is your office, and this means you can use 20% of your home expenses as business deductions.

The home office deduction is only available to those that use a portion of their home EXCLUSIVELY for business purposes. The keyword here is “exclusive”. Read the IRS page on the home office deduction before rushing to fill out Form 8829 to claim the deduction, as the IRS has been trying to crack down on people incorrectly claiming the home office deduction.